Synthesia’s Series C – And a Few Lessons Learned Building a Generative AI Startup

Synthesia, the market leader in AI video generation, is announcing this morning an exciting $90M Series C financing.

This is a great milestone for the company, making it a newly-minted unicorn and adding strong new partners (Accel, Nvidia, and some great individuals) to the team. Beyond the fundraising momentum and accolades, however, Synthesia has first and foremost been building a really impressive business. Over 35% of the Fortune 100 now use Synthesia’s enterprise offering, and over 50,000 businesses use its self-serve product.

Much to their credit, the company’s founders (Victor, Steffen, Lourdes and Matthias) were very early to the Generative AI wave, starting the company at a time (2017) when there was significant technology risk and limitations, to the point that what they were doing was probably a bit weird, if not outright crazy. Several years later, by the time FirstMark led the Series A early 2021, the term “generative AI” was still not a thing – my blog post announcing the round used the term “video as code” and in my 2021 MAD landscape, Synthesia appeared in a box we called “synthetic media”, for lack of a better term.

Anecdotally, this Series C is another example of the growth market showing some sign of life lately, at least for A+ companies, in the same vein as Pigment’s recent announcement, albeit perhaps less surprisingly given the hype around Generative AI.

Given the explosion of Generative AI and the flood of brand new startups that were created in the space over the last 6 months, there are interesting early lessons to learn from Synthesia’s journey so far:

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Pigment’s Series C – And a Few Thoughts on the Growth Market

Pigment just closed an exciting $88M Series C (TechCrunch coverage here). The company is rapidly emerging as the global leader in the next generation of business planning platforms (aka Anaplan replacement), a testament to the power of a world-class team delivering great execution consistently over years.

While we at FirstMark are certainly excited to have been a part of the journey as investors since the seed round, this round is also noteworthy in terms of what it may (or may not) signal about the broader market. A few thoughts:

Growth market: The last 18 months have been incredibly slow in the growth market. Yet this growth round at Pigment was completely preemptive, and highly competitive, involving a number of top firms. What does it mean for the growth market? Maybe it’s an example of continued flight to quality during a downmarket phase – investors seeking A+ companies. But maybe it’s also a sign of the growth market coming back to life, progressively. I certainly get an impression, talking to my growth friends, that everyone is antsy to do more deals after largely sitting on their hands for the last 18 months, and the market has recalibrated somewhat to more reasonable levels. The obvious caveat is that one shouldn’t derive pattern from a small n, but anectodally, another portfolio company of mine will also announce a growth round soon.

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BFM Business (French TV) Interview

The only thing better than VC pontification in general is VC pontification *in French*

Thanks Sabrina Quagliozzi and BFM Business for giving me the opportunity to chat about the current state of VC markets on Tech & Co. at the NASDAQ on Times Square.

Certainly a big pull back in venture and growth investing so far this year – the header above says “Markets: after the party, investors have a hangover” (!)… but many reasons to be hopeful, as the long term trends around digital transformation, AI and automation will only accelerate from here.

Also, the NYC tech ecosystem is on 🔥🔥 and a perfect home in the US for European startups

Here’s the video: What’s up New York : Après la fête, les investisseurs ont la gueule de bois – 10/10

Introducing the *Emerging* MAD (Machine Learning, AI, Data) Index

A few weeks ago, my colleague John Wu and I introduced the MAD Index, a new public market index to track the progress of “pure play” machine learning, AI and data public companies. This was an initial group of 13 companies, which has since then increased to 14, following the UiPath IPO.

Today, we’re introducing the Emerging MAD Index, a companion to the public MAD index. The idea is to track a group of private companies that show high potential to join the MAD Index in the future.


Just like the Public MAD Index, our goal is to capture “pure play” machine learning, AI and data companies.

In practice, that generally means infrastructure companies offering tools to store, process and analyze data, create and manage machine learning models, and/or automate core processes deep in the stack – broadly horizontal companies serving a variety of business needs across departments, industries and geographies.

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In conversation with Guy Podjarny, Founder & President, Snyk

In just a few years of hyper growth, Snyk has become a $2.7B unicorn, most recently raising $200M in September 2020. A developer-first security company, it has also helped usher the “DevSecOps” category.

At our most recent Data Driven NYC, we had the pleasure of hosting its Founder & President, Guy Podjarny, zooming in late at night from Israel.

We covered many interesting topics, including:

  • What does DevSecOps mean?
  • How did Snyk initially get developers to care, and how did they expand horizontally from there?
  • What is infrastructure as code?
  • Thoughts Snyk Code and Snyk’s vulnerability database
  • The nuances of combining a bottoms-up, freemium motion focused on developers, with an enterprise motion focused on economic buyers of Snyk’s products.

Below is the video and below that, the transcript.

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In conversation with Wes McKinney, CEO, Ursa Computing

For anyone in the data analysis community, Wes McKinney a very well known figure. In addition to literally writing the book on the topic (“Python for Data Analysis”), he’s played a leading role in several key open source projects: he created Python Pandas, he’s a PMC member for Apache Parquet, and he’s also the co-creator of Apache Arrow, his current development focus. 

He’s also a serial entrepreneur, having co-founded DataPad (acquired by Cloudera) and now Ursa.

So it was a real pleasure hosting Wes for a chat at our most recent Data Driven NYC. As always, we tried to position the conversation to be approachable by everyone (with high level definitions) while being interesting for technical folks and industry experts.

Watch the video below (or read the transcript copied below the video) to learn:

  • What are pandas? What is a dataframe?
  • What is Arrow? What is its history and why is it a big deal?
  • What is Ursa Computing?
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New York: The New Center of Gravity of European Tech

While it’s certainly possible to build a tech giant solely in Europe, the path to building a global, category-dominating company will, for most European tech startups, require building a strong presence in the US.

As a result, sooner rather than later, European startups will start thinking through their US expansion strategy.  One deceptively simple question of that strategy is “where should we build our US headquarter”?

Up until a few years ago, there wasn’t much of a debate: Silicon Valley, despite the distance and time difference with Europe, was the obvious choice. There was essentially nowhere else to go, except perhaps Boston for life sciences.

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Go to Market Strategies for Enterprise Startups: In Conversation with Martin Casado, GP, Andreessen Horowitz

What is the number one mistake technical founders make? Why is pricing so important? Should entrepreneurs avoid at all costs having a service component to their business? What is fundamentally new and different in go to market strategies for modern enterprise software startups?

A self-avowed “failed physicist”, Martin Casado is a General Partner at Andreessen Horowitz, and previously was the co-founder and CTO of Nicira, a pioneer in software-defined networking and network virtualization that was acquired by VMware for $1.26 billion.

I have had the pleasure of getting to know Martin through the board of ActionIQ, a great NYC startup in which we are both investors.

Martin joined us for a fireside chat at the most recent edition of Data Driven NYC. The conversation centered largely around one of Martin’s favorite topics, go to market strategies for enterprise startups. There’s plenty of interesting thoughts and directly applicable advice for entrepreneurs in there, as Martin spoke as much from his previous founder experience as he did as a VC.

Here’s the video, and my notes from the chat are below the fold.

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The Battle For The Connected Home Is Heating Up

Note: This post first appeared in TechCrunch, here.

Almost 15 years ago, a friend of mine at McKinsey spent a few nights writing a document called “The Battle for the Home”. The thesis at the time was that with broadband, the home PC was gradually going to challenge the TV as the core home digital system. Over the following few years, that battle gradually grew more complex, as the home saw the adoption of a new generation of HDTV sets, game consoles, set-top boxes and DVR options. But fundamentally, the discussion was about who was going to control the home entertainment system.

Now, the battle has expanded to the rest of the home. With the emergence of connected devices, the entire home is being reinvented as a data product, opening great opportunities to entrepreneurs.  A whole new generation of startups is rushing in. Nest, with its beautifully-designed home products, has become the poster child for this phenomenon, but many others are producing exciting new connected devices and platforms, at an outstanding pace.

The irony of this market, not always acknowledged, is that a number of large companies with big brands and existing “pipes” in our homes, have been unusually innovative. From connected locks to mobile-controlled home automation platforms, large companies such as GE, Comcast or Philips have been offering connected home products for a while now, sometimes at the risk of cannibalizing their own analog products. As a result, the new wave of connected home startups finds itself in the fairly unusual position of having to not only execute and build consumer brands, but also out innovate dynamic incumbents. The home is once again at the crossroads of a major battle between startups, cable companies, telcos, industrial conglomerates, and large technology companies.

As VC money is starting to pour into the space (SmartThings, August and Arrayent all announced significant rounds just in the last two weeks, as did Quirky, as part of an increased focus on the Internet of Things), a new battle for the home is heating up between startups, cable companies, telcos, industrial conglomerates, and large technology companies.

The first battle for the home was not always kind to startups. Many found that, once past the sheer difficulties of building a hardware product, consumers often preferred the convenience of package deals offered by cable companies to best-of-breed point solutions, resulting in many failures or tepid exits.

While this new generation of startups has an exciting opportunity in front of it, the path to success will also be narrow. To succeed long term, startups will need to maneuver shrewdly among the giants in the space, and do what startups do best: deliver truly ground breaking products, build developer networks, bet on openness and interoperability, and leverage data in innovative ways.

The new household brands

There are plenty of reasons to be excited about the emergence of new connected home startups. For reasons I discussed in an earlier post, there’s been an explosion of activity in the space, initially financed by crowdfunding and now increasingly by institutional money –  SmartThings and August, for example, both just announced large Series A rounds. Each category is seeing rapid innovation: thermostats (Nest), locks (August, Lockitron), security (Canary, Doorbot), lights (LIFX), home automation (SmartThings, Zonoff, Ninja Blocks, Ube, Berg, Twine, Xively, etc.), garden products (Bitponics, Click & Grow), bathroom appliances (Withings), nursery products (Sproutling, in which I’m an investor), and many others.

This is a big opportunity. Beyond the fact that it’s already a significant market ($13 billion, say some estimates), connected home entrepreneurs have an opportunity to create, quite literally, new household brands. The emergence of connected devices is one of those disruptive waves that define entire new product categories. Consumption habits change and reform around a handful of brands that become leaders in the space. Some wonder why smart and ambitious entrepreneurs are scrambling to build products in those seemingly mundane home categories; in fact, those entrepreneurs are attracted like heat-seeking missiles by the opportunity to build category-defining brands. At the current pace, this window of opportunity may not last more than a couple of years, and successful first movers will have a strong brand advantage.

Clearly, the adoption of those connected home products is still largely the province of hobbyists and tech enthusiasts. Interestingly however, large retailers seem to be excited about distributing those products to their mainstream audiences.  Many entrepreneurs I speak with report engaging with some of the biggest players, such as Home Depot, Lowe’s, Staples, Apple stores and AT&T.

While this is not a recipe for long-term success, there’s an element of self-fulfilling prophecy here, where the combination of entrepreneurial energy, investor money and retailer interest could lead to rapid growth for the connected home startups.

Not so fast

However, for all the enthusiasm on crowdfunding platforms and in the press, this is already a crowded space. Many of the existing players are large companies that come equipped with deep distribution networks and a whole ecosystem of service providers that make a living installing and maintaining their products.

First, there are all the incumbents, both in home and energy automation (Crestron, Lutron, Control4, etc) and home security (ADT, Protection 1, Vivint, etc.). Not the most exciting brands? Perhaps.

Second, many large industrial companies have already launched their own connected home products – think, for example, Yale’s Z-Wave deadbolt or the Philips Hue, a smartphone-controlled LED bulb. There are many other examples.

Third, the cable providers and telcos increasingly view home automation as a strategic priority. Comcast (Xfinity), Time Warner Cable, Cox, AT&T and Verizon (FiOS) all have solutions for anything from thermostat and light control to security, accessible through mobile apps.

Last but not least, the large technology companies Apple and Google are already de facto active in the space, as the mobile phone has become the remote control for the connected home. They may want to go deeper. Google’s “Android @Home” effort seems to have faltered so far, but Chromecast is intriguing. Apple is rumored to be interested in the space at the highest level of the organization, and actively meeting with startups. It has been suggested that they should acquire Nest to enter the space and re-acquire the Apple-bred talent there. Microsoft (Kinect), Samsung and HTC all have existing or emerging efforts.

Dancing with the giants

So what’s a startup to do? For those ambitious startups that are gunning for a central position in the connected home, the question is what strategy gets you there faster

One key choice is whether to go “product first” (build a consumer product, like Nest) or “platform first” (build a platform that connects all products, like Revolv). The former involves more hardware, but arguably offers a better chance of gaining rapid sales traction if the product delivers. It is also less of an immediate challenge to most of the large companies in the space. The path to control of the home involves releasing multiple products that connect to one another (which Nest is starting to do with its Protect smoke alarm), and eventually become a platform.

The “Platform First” strategy is more of a software play, and its core value proposition is home automation.  It offers strong long term defensibility if you get there, but the journey is fraught with difficulties.  First, as Lowe’s has learned with Iris and Schlage with Nexia, it is difficult to get consumers to buy and install a “hub”.  In addition, among the early adopters that are likely to do so, a non-trivial portion are Arduino and Raspberry Pi aficionados that prefer to hack their own system.   For mainstream adoption, one avenue for platform players could be to work with home developers and gradually get their systems included in new construction, obviously a long process.   Second, the Platform strategy places startups in direct competition with Comcast, Verizon FiOS and many other large companies that are also vying to become the hub for the automated home, and already have millions of customers.  The bet here for “Platform First” players is that, by promoting openness and interoperability in a way that is harder for large companies to do, they can build a strong network of developers that write to the platform – perhaps starting with hobbyists and the smaller “Product first” companies that need help competing with the “Product first” leaders – the benefit for the customer being that they will be able to connect all their best-of-breed point solutions.

Another key choice, particularly for “Platform First” players, is whether to go consumer (develop your own brand) or enterprise (be an enabling technology for other brands).  Some solid companies have chosen the latter, such as iControl Networks (which powers Comcast’s Xfinity and others) or Zonoff (which powers Staples Connect). Others like SmartThings have been building a recognizable brand in the space, which some large companies could perceive as a threat. My sense is that eventually most startups will need to work with the large companies in some capacity to be successful, so perhaps the question is what strategy puts you in the best negotiating position for a partnership (or an acquisition).

Seven Key Characteristics

Beyond positioning, connected home startups will need to combine several characteristics to build long term value and defensibility. Here is my list of seven.

  1. Design quality is hugely important in transforming those trivial products into objects of desire, and to succeed connected home startups will need to be true “design natives”: Nest, August and Canary are great examples of design done right.
  2. Simplicity of installation and usage will be essential: little effort in, maximum return out.
  3. Mission criticality and strong ROI are key in a space where some products could easily be mistaken for nice to have “gadgets”:  security, health and energy are great categories from that perspective.
  4. In the same vein, startups will need to deliver real innovation.  Simply adding connectivity to a home product doesn’t make it great.  Is the connected product 10X better than its analog equivalent? Or, even better, does it simply not have an analog equivalent?
  5. A multi-product vision and the ability to release successful products back to back will be crucial in building self-standing, long-term successes in the space – obviously, easier said than done.
  6. Software openness and interoperability will be necessary to successfully build developer networks and partnerships.
  7. Perhaps most importantly, startups will need to be true “data natives”.  Many connected devices offer exciting opportunities to build “data network effects”:  each device captures data that, aggregated and analyzed at the cloud level, enables the extraction of insights that in turn make each individual device smarter, through machine learning and predictive analytics.  This is one of the main reasons why the Internet of Things goes much beyond a simple hardware play, and will be a key aspect of the defensibility of the winners in the space: you pay for the hardware, but the software (and data) is what keeps you using the product.

This new battle for the home is just getting started.  It will have many twists and turns, and I’m very excited to see how it all unfolds.

Calling all data scientists! Participate in the first global data science hackathon

Are you a smart data scientist? In connection with Big Data Week and Data Science London, we’re helping organize a global data science hackathon that will simultaneously take place in various locations around the world (including London, Sydney, and San Francisco). We will host the NYC event at the Bloomberg Ventures office in the West Village. The aim of the hackathon is to promote data science and show the world what is possible today combining data science with open source, Hadoop, machine learning, and data mining tools.  The event will run from Saturday April 28 at 8am EST to Sunday April 29 at 8am EST.  We’ll provide copious amounts of pizza, caffeine and some prizes.  Interested? Please register here

Hyperpublic acquired by Groupon

Like many in the NYC tech community, I was excited to hear the news last Friday night that data startup Hyperpublic was acquired by Groupon.

In addition to the fact that he was the first  speaker we ever had at our  NYC Data Business Meetup (which should put him in a very special place in history, right there… right?), Jordan Cooper, Hyperpublic’s co-founder and CEO, is a terrific entrepreneur, very thoughtful about the data space, and well liked and respected by all who know him in the tech community. He and his co-founder Doug Petkanics built an awesome team (including scoring a big win when they recruited Jeff Weinstein), got some great seed investors (including Lerer Ventures and Thrive Capital, which also had another quick win with GroupMe a few months ago), and it’s always nice to see good things happening to good people.

This is also good news for the budding big data and enterprise tech community in NYC. Hyperpublic was very much part of an emerging ecosystem of interesting, tech heavy companies in NYC, that includes 10gen (MongoDB), Enterpoid, Nodejitsu, Datadog, Opani, Mortar Data, etc., and seeing a young company successfully go through the cycle of product creation, seed funding and exit is encouraging for aspiring entrepreneurs in that space.

Hyperpublic was tackling some difficult engineering problems. As a geo-local data company, they pulled data from many different sources (through both APIs and web crawling) and then organized and structured it in a way that developers could use to build location based applications.  The difficulty of this type of effort comes from ensuring that the data has enough (i) breadth (defined by the number of geographic regions where they have a critical mass of relevant data – they got to 50 cities), (ii) depth (how detailed the data about each point of interest is) and (iii) freshness (for example being able  to pick up on location openings and closings).  All of this requires an ability to gather, normalize and cross-reference enormous amounts of unstructured data at rapid intervals, and doing it with high levels of certainty is not a simple task.

Hyperpublic made very solid inroads in terms of addressing those challenges, due in large part to the quality of the engineering team and culture that Jordan and Doug had managed to put together.  Both from a technology and team perspective, the acquisition makes perfect sense for Groupon, as they ramp up their effort in the mobile local space.

From an industry watch perspective, however, the acquisition highlights the difficulty of building long term, standalone businesses based purely on gathering data and making it available to developers, including in the geo local space.  Simple Geo tried this as well and ended up being acquired by Urban Airship for $3.5 million. Urban Airship announced quickly afterwards that it was shutting down Simple Geo services altogether, leaving developers that were relying on it pretty much stranded.  Hyperpublic presumably fared a lot better, but Groupon acquired it for its own use (as a needed element to its infrastructure), and will also stop providing the data to developers, effective March 2.  It will be interesting to see how companies like Factual (which covers more than geo-local data) and PlaceIQ (which has a slightly different twist on geo-local) evolve in that context.

Startups that are in the business of gathering data and providing it to developers (as opposed to selling it to the enterprise) can get rapid user adoption, but typically face a revenue model challenge.  In addition, particularly in the geo local data space, there is an uncertainty around how to work in the long term with the larger companies that capture a lot of the geo local data, as a by product of their core activity.  Are they friends or foes? Many of the large consumer internet companies have a geo local API (Facebook Graph API, Foursquare Venue Database, Google Places API, Microsoft Bing Maps Location API, Yahoo Local API, Yelp API), which the data companies have used as one of their sources.  While those large internet consumer companies have been happy so far to cooperate with the data companies, how long will they continue to do so, if it turns out that the data becomes a real potential source of revenue?

From Hyperpublic’s perspective, therefore, the timing of the acquisition makes perfect sense – they built the team and the technology, and took the company to the stage where a natural acquirer like Groupon could come in and acquire them.  Taking it to the next level, while certainly possible, would have required a significant amount of additional time and money, and possibly figuring out a consumer facing product to start capturing their own geo local data, in a context where uncertainty about the revenue model and the competition could have made things tricky.

As a side note, it is exciting to see recently-IPO’ed Groupon getting into acquisition mode quickly (see also Kima Labs), and one can only get excited imagining how acquisitive Facebook is going to be after it goes public.

Congrats to Jordan, Doug, Jeff and the Hyperpublic team!